Dollar and 10-Year Sovereign Debt Yields a Bit Higher, But Bitcoin and Gold Prices Slip – Currency Thoughts
Dollar and 10-Year Sovereign Debt Yields a Bit Higher, But Bitcoin and Gold Prices Slip
July 25, 2025
The weighted DXY dollar index climbed 0.4% overnight, lifted by a 0.5% advance against the yen and sterling but a smaller dollar gain of 0.2% relative to the euro and Swiss franc. The dollar rose 0.4% against the Australian dollar, 0.3% versus the Canadian and New Zealand dollars, and 0.2% against Mexico’s peso.
Ten year sovereign debt yields rose three basis points in Germany, 2 bps in the U.K., France, Italy and Spain, and one basis point in the United States.
U.S. stock futures are marginally up. Led by the AI technology, second quarter earnings have been somewhat above expectations. A snag in the U.S.-Japanese trade deal centering on how profits from the promised $550 billion Japanese investment in America are to be shared. The Nikkei-225 equity index closed down 0.9% this Friday, and stock markets in Hong Kong and India respectively lost 1.1% and 0.9%. European exchanges are also flashing red.
Prices for Bitcoin and gold have declined so far today by 1.5% and 1.0%. Oil is 0.4% firmer.
Whereas Ukraine’s central bank rate was left unchanged yesterday at 15.5%, the Central Bank of Russia today cut its key rate by 200 basis points to 18.0% as had been expected. Monetary officials there explained, “current inflationary pressures, including underlying ones, are declining faster than previously forecast. Domestic demand growth is slowing. The economy continues to return to a balanced growth path.” At 9.4% in June, Russian consumer price inflation was down from 10.3% in March and not from from the 9.2% reading in September 2022 when Russian troops initially invaded neighboring Ukraine. Russian inflation quickly shot up as high as 17.8% after that attack but had decelerated thereafter to 2.3% by April 2023. Interest rate hikes in the second half of 2023 totaling 750 basis points were followed by an additional 500-bp tightening during the second half of 2024. Today’s rate cut is the second one so far after an initial 100-basis point cut last month. More reductions seem probable.
The monthly German business climate index for July compiled by the IFO Institute ticked up by less than expected to a 14-month high of 88.6, which still suggests a sluggish pace of growth. Sentiment improved in construction and manufacturing but retreated in the service and trade sectors. Perceived current conditions and future expectations each rose modesly.
British consumer confidence slid a point to a two-month low in July. At -19, the index level still conveys quite a bit of pessimism but not as much as in late 2022 when a bottom of -49 was touched. Weaker-than-forecast British retail sales were also reported today. From a 2.8% plunge in May, such only recovered 0.9% last month. Sales were 1.7% higher than a year earlier.
French consumer confidence edged a point higher in July above a 20-month low of 88 posted in both May and June.
In Italy, consumer confidence and business sentiment in July improved to their best levels in five and fourteen months.
Business sentiment deteriorated to a 7-month low last month in Turkey but rose to 3-month highs in Denmark and Slovenia.
Japan released two indicators of inflation, corporate services prices and Tokyo consumer prices, which serve as a leading barometer of the national CPI series. The CSPI dipped 0.1% in June and recorded its smallest on-year advance (3.2%) since December. Core Tokyo CPI inflation fell to a 4-month low of 2.9% mainly reflecting lessening energy price pressure. The energy component’s on-year change plunged from 9.4% in April to -0.8% in July. The Bank of Japan is not widely expected to cut its short-term interest rate at next week’s scheduled policy review.
Japan’s May index of leading economic indicators has been revised half a point lower but still exceeded April’s level. The index of coincident economic indicators, in contrast, got revised upward and warranted a changed trend categorization of “halting to fall.” That was the 13th straight month that “halting to fall” has been chosen, but initially officials had downgraded the view to “worsening.”
Swedish producer prices in June fell 0.6% on month and by 3.1% (the most in 18 months) on a year-on-year basis.
The M3 stock of money in the euro area in the second quarter grew 3.7% on year, matching the first quarter’s average pace, but money growth slowed to 3.3% in June alone.
U.S. durable goods orders in June slightly outperformed expectations. After a 16.5% jump in May, total orders dropped just 9.3%, resulting in a first-half increase of 7.9%. Non-defense capital goods orders excluding the volatile aircraft item fell 0.7%, however, and recorded just a 2.1% increase for the first half of 2025.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Central Bank of Russia, consumer confidence in France, German IFO Business climate index, U.S. durable goods orders
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